FOR THE YEAR ENDED 30 JUNE 2015
NATURE OF BUSINESS
Assore Limited was incorporated in South Africa in 1950 and is a mining holding company engaged principally in ventures involving base minerals and metals. The company’s shares are listed on the JSE Limited (the JSE) under “Assore” in the general mining sector and its ultimate holding company is Oresteel Investments Proprietary Limited. Assore’s principal investment is a 50% (2014: 50%) interest in Assmang Proprietary Limited (Assmang), which it controls jointly with African Rainbow Minerals Limited (ARM), which is also listed on the JSE. Assmang mines iron, manganese and chrome ores, and produces manganese alloys. In addition, the group mines Wonderstone (a type of pyrophyllite), a portion of which is beneficiated to produce high-precision components, and wear and acid-resistant tiles, which are installed in various mining, industrial and filtration applications. The group, through its wholly owned subsidiary, Ore & Metal Company Limited, is responsible for marketing all products produced by its joint venture and subsidiary companies, the bulk of which is exported and the remainder either used in the group’s beneficiation processes or sold locally. Details of the group’s activities are set out, by activity, in the operational review and commentary (refer here).
FINANCIAL RESULTS
The consolidated financial results for the year ended 30 June 2015 are summarised below:
| Year ended 30 June | ||||
| 2015 | 2014 | |||
| R’000 | R’000 | |||
| Turnover | 2 526 096 | 1 768 561 | ||
|---|---|---|---|---|
| (Loss)/profit before joint-venture entity and associate | (25 501) | 457 567 | ||
| Share of profit from joint-venture entity, after taxation | 1 317 138 | 3 572 155 | ||
| Share of loss of associate, after taxation | (1 197) | – | ||
| Profit for the year | 1 290 440 | 4 029 722 | ||
| Attributable to: | ||||
| Shareholders of the holding company | 1 403 371 | 4 005 123 | ||
| Non-controlling shareholders | (112 931) | 24 599 | ||
| As above | 1 290 440 | 4 029 722 | ||
| Profit attributable to the shareholders of the holding company (as above) | 1 403 371 | 4 005 123 | ||
| Dividends relating to the group’s activities for the year under review (refer note 26 to the consolidated financial statements) | (619 242) | (1 032 071) | ||
| Interim dividend No 116 of 300 cents (2014: 450 cents) per share – declared on 10 February 2015 | 418 821 | 628 232 | ||
| Final dividend No 117 of 300 cents (2014: 550 cents) per share – declared on 26 August 2015 | 418 821 | 767 839 | ||
| Less: Dividends attributable to treasury shares | (218 400) | (364 000) | ||
| Profit relating to year after dividends, net of dividends retained in the group on treasury shares | 784 129 | 2 973 052 | ||
| The attributable interest of the group in the aggregate net profit and losses after taxation of subsidiary companies was as follows: | ||||
| Subsidiary companies | ||||
| – Profits | 401 219 | 543 674 | ||
| – Losses | (426 720) | (86 107) | ||
CONTROL OVER FINANCIAL REPORTING
The directors of the company are responsible for the preparation and fair presentation of the financial statements and related financial information included in this report. The independent external auditors, Ernst & Young Inc., whose report is set here, are responsible for expressing an opinion on the financial statements based on their audit.
The financial statements included in this report are based on judgements and estimates which are intended to be both reasonable and prudent and have been prepared by management in accordance with International Financial Reporting Standards (IFRS). The accounting policies are consistent with those of the previous year.
The financial statements have been prepared on the going concern basis and the directors have no reason to believe that the group will not be a going concern in the year ahead. With regard to the valuation of assets, the directors are of the opinion that the carrying amount of all assets included in the statement of financial position are appropriately valued.
In order to discharge their responsibilities with regard to the financial statements, the directors ensure, through the group’s appointed Audit and Risk Committee, that management maintains adequate accounting records and systems of internal control which are developed and reviewed for effectiveness on an ongoing basis. The systems of internal control are established organisational structures, policies and procedures, including budgeting and forecasting disciplines and are managed and controlled by suitably trained personnel who are organised in structures with appropriate segregation of authorities and duties. While internal controls are intended to adequately safeguard the group’s assets and prevent and detect material misstatement and loss, these systems can only be expected to provide reasonable, and not absolute, assurance as to the reliability of the financial information included in this report. The internal financial controls were assessed by the group’s outsourced internal audit function and were found to be satisfactory.
JOINT-VENTURE ENTITY
Assore holds a 50% interest in Assmang, which it controls jointly with ARM in terms of a long-standing shareholders’ agreement. In accordance with IFRS, Assmang is accounted for on the equity accounting basis, and Assore has disclosed its share of Assmang’s profit as “share of profit from joint-venture entity, after taxation”. Set out below are the financial statements of Assmang in abridged format, which combine its continuing and discontinued operations. The “Assets held for distribution” in Assmang refers to the sale of Dwarsrivier (refer “Acquisition of remaining 50% of Dwarsrivier” on the following page).
ABRIDGED CONSOLIDATED INCOME STATEMENT OF ASSMANG
| Year ended 30 June | ||||
| 2015 | 2014 | |||
| R’000 | R’000 | |||
| Turnover | 21 121 497 | 27 561 503 | ||
|---|---|---|---|---|
| Profit before taxation | 3 703 280 | 9 892 013 | ||
| Taxation | 1 044 057 | 2 722 755 | ||
| Earnings | 2 659 223 | 7 169 258 | ||
| Dividends declared during the year | 3 000 000 | 3 500 000 | ||
| (Loss)/profit for the year after dividends paid | (340 777) | 3 669 258 | ||
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF ASSMANG
| At 30 June | ||||
| 2015 | 2014* | |||
| R’000 | R’000 | |||
| Assets | ||||
| Non-current assets | 23 725 390 | 23 082 111 | ||
| Current assets | ||||
| Inventories | 4 448 860 | 4 426 867 | ||
| Trade and other receivables | 3 532 558 | 4 822 595 | ||
| Financial assets | 85 017 | 112 130 | ||
| Deferred tax asset | 2 821 | – | ||
| Assets held for distribution | 1 103 246 | – | ||
| Cash and cash equivalents | 5 425 101 | 5 975 535 | ||
| Total assets | 38 322 993 | 38 419 238 | ||
| Equity and liabilities | ||||
| Equity | 28 929 696 | 29 270 473 | ||
| Non-current liabilities | ||||
| Deferred taxation liability | 5 035 202 | 5 072 666 | ||
| Long-term provisions | 959 828 | 913 143 | ||
| Current liabilities | ||||
| Trade and other payables | 1 950 126 | 2 231 893 | ||
| Short-term provisions | 608 367 | 585 290 | ||
| Taxation | 369 778 | 345 773 | ||
| Liabilities directly associated with the assets held for distribution | 469 996 | – | ||
| Total liabilities | 9 393 297 | 9 148 765 | ||
| Total equity and liabilities | 38 322 993 | 38 419 238 | ||
| Capital expenditure | 3 836 808 | 3 643 143 | ||
| Capital commitments | 5 035 856 | 7 644 668 | ||
| *Comparative figures have been restated in order to be consistent with the level of detail disclosed in the current year. | ||||
ACQUISITION OF REMAINING 50% OF DWARSRIVIER
On 24 June 2015, the company announced the acquisition from ARM of its 50% indirect share of Dwarsrivier Chrome Mine (Dwarsrivier) (held in Assmang) for a consideration of R450 million. The completion of the transaction is subject to certain conditions precedent, the most significant of which is the consent required, in terms of the Mineral Resources and Petroleum Development Act, by the Department of Mineral Resources (DMR) for the transfer of the mining right from Assmang that will operate Dwarsrivier (the Section 11 transfer). The purchase consideration has been disclosed in the consolidated statement of financial position as “Restricted cash” and will be adjusted for capital expenditure net of financial results from the operation in the intervening period until the Section 11 transfer is achieved. Once consent is granted, Assore will own 100% of Dwarsrivier, retrospective to 1 July 2014. Refer notes 8 and 32 to the consolidated financial statements for more detail.
ACQUISITION OF MINORITY STAKE IN IRONRIDGE
On 2 December 2014, the company announced that it had subscribed for a 30,3% stake in IronRidge Resources Limited (IronRidge), against which it was awarded a stake of 29,9% on 12 February 2015 for UK pounds 6,98 million (R121 953 000). The major focus of IronRidge is prospecting for iron ore deposits in Gabon. Refer note 5 to the consolidated financial statements for more detail. The investment is accounted for using the equity accounting method, since the group has significant influence in its operations.
DIRECTORS’ EMOLUMENTS
| Other | ||||||
| Directors’ | Contributions | fringe | ||||
| fees | Bonuses | to pension | benefits | |||
| (refer note 1) | Salaries | (refer note 2) | scheme | (refer note 3) | Total | |
| R’000 | R’000 | R’000 | R’000 | R’000 | R’000 | |
| 2015 | ||||||
| Executive | 110 | 4 264 | 355 | – | 274 | 5 003 |
| Desmond Sacco (Chairman) | ||||||
| CJ Cory (Chief Executive Officer) | 96 | 4 950 | 14 225 | 1 249 | 368 | 20 888 |
| AD Stalker (Group Marketing Director) | 96 | 2 615 | 9 703 | 650 | 308 | 13 372 |
| BH van Aswegen (Group Technical and Operations Director) | 96 | 2 522 | 9 643 | 636 | 354 | 13 251 |
| EM Southey (Deputy chairman and lead independent director) | 535 | 535 | ||||
| RJ Carpenter (resigned 15 June 2015) | 205 | 205 | ||||
| TN Mgoduso (appointed 2 February 2015) | 104 | 104 | ||||
| S Mhlarhi | 295 | 295 | ||||
| IN Mkhari (appointed 2 February 2015) | 104 | 104 | ||||
| WF Urmson | 455 | 455 | ||||
| Alternate | ||||||
| PE Sacco | 36 | 1 862 | 7 213 | 470 | 267 | 9 848 |
| 2 132 | 16 213 | 41 139 | 3 005 | 1 571 | 64 060 | |
| 2014 | ||||||
| Executive | ||||||
| Desmond Sacco (Chairman) | 110 | 4 264 | 355 | – | 256 | 4 985 |
| CJ Cory (Chief Executive Officer) | 96 | 4 583 | 15 261 | 1 177 | 453 | 21 570 |
| AD Stalker (Group Marketing Director) | 96 | 2 422 | 9 833 | 622 | 274 | 13 247 |
| BH van Aswegen (Group Technical and Operations Director) | 96 | 2 336 | 9 768 | 600 | 334 | 13 134 |
| EM Southey (Deputy Chairman and lead independent director) | 420 | 420 | ||||
| RJ Carpenter | 180 | 180 | ||||
| S Mhlarhi | 240 | 240 | ||||
| WF Urmson | 360 | 360 | ||||
| Alternate | ||||||
| PE Sacco | 36 | 1 693 | 7 270 | 435 | 253 | 9 687 |
| 1 634 | 15 298 | 42 487 | 2 834 | 1 570 | 63 823 |
| Notes | |
| 1. | Directors’ fees for executives include fees received from Assmang. |
| 2. | Due to the shareholding structure the company is unable to offer directors remuneration by way of share incentive or option arrangements, and bonuses are determined based on the group’s results for the year and the achievement of its |
| 3. | Other fringe benefits include medical aid contributions, car scheme allowances, life insurance contributions, group life contributions, leave paid out, study loan benefits, use of assets and unemployment insurance fund contributions. |
| For more detail relating to the group’s remuneration policy and structure, refer “Remuneration”. | |
DIRECTORS’ INTERESTS IN SHARES OF THE COMPANY
Interest of the directors in the ordinary shares of the company at 30 June 2015 were as follows:
| Direct | Indirect | Direct | Indirect | |
| beneficial | beneficial | beneficial | beneficial | |
| number of | number of | number of | number of | |
| shares | shares | shares | shares | |
| 2015 | 2015 | 2014 | 2014 | |
| Executive directors | ||||
| Desmond Sacco | 960 000 | 32 430 489 | 883 380 | 32 430 490 |
| CJ Cory | 50 000 | – | 50 000 | – |
| AD Stalker | – | – | – | – |
| BH van Aswegen | 4 505 | – | 4 505 | – |
| EM Southey | – | – | – | – |
| RJ Carpenter (resigned 15 June 2015) | 5 000 | – | 5 000 | – |
| TN Mgoduso (appointed 2 February 2015) | – | – | – | – |
| S Mhlarhi | – | – | – | – |
| IN Mkhari (appointed 2 February 2015) | – | – | – | – |
| WF Urmson | – | – | – | – |
| Alternate director | ||||
| PE Sacco | 227 580 | – | 217 380 | – |
| 1 247 085 | 32 430 489 | 1 160 265 | 32 430 490 | |
DIRECTORATE AND SECRETARY
The names of the directors, at the date of this report, and details of the company secretary, including its business and postal addresses, are set out on the inside back cover of this report.
Subsequent to the date of the previous annual report and up to the date of this report the following changes were made to the Assore board:
- 2 February 2015 – Ms Thandeka Nozipho Mgoduso and Mrs Ipeleng Nonkululeko Mkhari were appointed as independent
non-executive directors and Ms Mgoduso was appointed as a member of the Social and Ethics Committee on 1 October 2015. - 15 June 2015 – Mr RJ Carpenter resigned from the board as a
non-executive director.
In terms of the Memorandum of Incorporation (MoI), Messrs EM Southey and WF Urmson are required to retire by rotation at the forthcoming Annual General Meeting (AGM). Messrs TN Mgoduso and IN Mkhari were appointed subsequent to the previous AGM and in terms of section 68(3) of the Companies Act are required to be reappointed at the next AGM. All of the aforementioned directors, being eligible, offer themselves for
DIVIDENDS
| 2015 | 2014 | |
| R’000 | R’000 | |
| Dividends declared during the year | ||
| Final dividend No 115 of 550 cents (2014: 350 cents) per share – declared 3 September 2014 | 767 839 | 488 624 |
| Interim dividend No 116 of 300 cents (2014: 550 cents) per share – declared on 10 February 2015 | 418 821 | 628 232 |
| Less: Dividends attributable to treasury shares | (309 400) | (291 200) |
| 877 260 | 825 656 | |
| Dividends relating to results of the group for the year under review | ||
| Interim dividend No 116 of 300 cents (2014: 450 cents) per share – declared on 10 February 2015 | 418 821 | 628 232 |
| Final dividend No 117 of 300 cents (2014: 550 cents) per share – declared on 26 August 2015 | 418 821 | 767 839 |
| Less: Dividends attributable to treasury shares | (218 400) | (364 000) |
| 619 242 | 1 032 071 | |
ANALYSIS OF SHAREHOLDING
The following analysis of shareholders, in accordance with the JSE Listings Requirements, has been established, based on an examination of the company’s share register at 30 June 2015. The directors are not aware of any material changes to this analysis between the
| 2015 | 2014 | |||
| Number | Number | |||
| of shares | % | of shares | % | |
| Shareholder spread | ||||
| Shares held by the |
||||
| – Holders in excess of 10% of the share capital | 105 021 450 | 75,23 | 105 021 450 | 75,23 |
| – Directors of the company (direct and beneficial) | 1 247 085 | 0,89 | 1 160 265 | 0,83 |
| 106 268 535 | 76,12 | 106 181 715 | 76,06 | |
| Public shareholders | 33 338 465 | 23,88 | 33 425 285 | 23,94 |
| 139 607 000 | 100,00 | 139 607 000 | 100,00 | |
| * As defined by Rule 4.25 of the JSE Listings Requirements | ||||
| Major shareholders | ||||
| Oresteel Investments Proprietary Limited | 73 190 000 | 52,43 | 73 190 000 | 52,43 |
| Main Street 460 Proprietary Limited (RF) (held 100% by Main Street 350 Proprietary Limited (RF) which is held 51% and 49% by the Boleng Trust and Assore Limited respectively)* | 15 367 000 | 11,01 | 15 367 000 | 11,01 |
| Main Street 904 Proprietary Limited (RF) (held 51% and 49% by the Fricker Road Trust and the Assore Employee Trust respectively)* | 16 464 450 | 11,79 | 16 464 450 | 11,79 |
| 105 021 450 | 75,23 | 105 021 450 | 75,23 | |
| Directors of the company | 1 247 085 | 0,89 | 1 160 265 | 0,83 |
| Others – less than 5% | 33 338 465 | 23,88 | 33 425 285 | 23,94 |
| 139 607 000 | 100,00 | 139 607 000 | 100,00 | |
| *Refer “Black economic empowerment status report”. |
SPECIAL RESOLUTIONS
The following special resolutions were passed on 28 November 2014:
- The annual remuneration payable to
non-executive directors in terms of section 66(9) of the Companies Act for their services as directors were increased, with effect from 1 January 2015, as follows:
• Deputy Chairman and lead independent non-executive directorR450 000 • Non-executive directors (excluding Deputy Chairman)R250 000 • Members of each of the Audit and Risk Committee, Remuneration Committee or Social and Ethics Committee R100 000 - The annual remuneration payable to executive directors, in terms of section 66(9) of the Companies Act as amended, for their services as directors was to remain at R60 000 per annum.
- That the board may authorise the company to directly or indirectly provide financial assistance to any present or future subsidiary or inter- related companies of Assore as contemplated in section 45 of the Companies Act, as amended.
EVENT AFTER THE REPORTING PERIOD
- On 26 August 2015, the board declared a final dividend of 300 cents per share amounting to R418,8 million, which was paid to shareholders on 21 September 2015.
